Now that we are past the election, we have received some questions around the potential changes to the tax law under a new administration. Proposed legislation has mentioned capital gains, corporate tax, and income tax.
Check out the video below where Barry McCall, CFP® and Austin Coley dive into the topic and share what we have been recommending to our clients.
If you have any questions, please reach out to us here, or give us a call at 615.370.4040. We'd love to talk with you further and help wherever we can.
“I think what, and historically, this is really true, politicians promise one thing to get elected, and then most deliver something different than what they promised.”
Transcript:
— Austin Coley: So Barry, now we've moved past the election, and a lot of our clients are looking ahead to 2021, 2022 and trying to figure out what the tax landscape is going to be moving forward. There's has been talk about increased capital gains tax, increased tax on corporations, and what that could mean for stock prices, is there going to be an increase in income tax? There's just a lot of questions surrounding that topic, and clients wondering if I should start to sell assets now while we know what the capital gains tax is? How should I approach this issue? How would you speak to that? -
— Barry McCall, CFP®: Sure. Gosh, that's such a challenging question to answer in this regard because there's still a lot of uncertainty about it. Every situation is different. If somebody needs to take gains, they need to do it regardless of what the tax law is. But looking specifically at what the new administration might do, I've talked to a number of different people. What I don't think is going to happen, and keep in mind, CNN and Fox Business are not coming to talk to me about my opinion. So this is strictly my opinion.
I think what, and historically, this is really true, politicians promise one thing to get elected, and then most deliver something different than what they promised. So if we look at what the incoming administration said they were going to do tax wise, I think historically it would be unwise to say, well they're going to do all of that. Right now, we just don't know what the makeup of the Senate is going to be. That's going to have a significant implication on that. Again, this is strictly my own opinion. I think that the landscape of the election would say, that there's still an agreement with a lot of the policies that the previous administration were doing and people want to see those continue.
I think that the new administration is going to make modest changes, not significant wholesale changes, because at the end of the day, they still want to get elected, and I think you've got these 2022 midterm elections that are looming out there. They're already positioning themselves, or thinking they clearly didn't do as well in the house and Senate as they had hoped. What does that mean? What do we have to do differently over the next two years to try to reflect that? I think that's going to influence policy, and I think whatever changes happen, my opinion it's going to be muted, versus what was promised.
That's a long way of saying, I think right now, given the uncertainty and what I think they're going to be able to deliver, I just don't think it would be smart to make changes based on, investment decisions, based upon that. If you need to do it, you know what the rates are now, and that those rates, at least if they're changed they will end on December 31st. So if you need to make changes, it would be prudent to do that now. But if you don't have to force something because of uncertain situations in the future, I don't think that that would be a prudent thing to do. -
— Austin: Sure. Let's wait and see what the rules are, and then make decisions at that point.
— Barry: Yeah, and I think it's just going to be murky. It really is. I don't think it's going to be as clear cut as what they say it's going to be. Because historically, it never has been. We could even see from the previous administration, what he promised and what they delivered were by and large two different things. It wasn't completely different, but that's some of it but not all of it. II think the other thing too, relative to not so much capital gains income but the estate tax, again, I don't see that changing. It's set to sunset in 2025, I believe? So I really don't see that being impacted until then. I think Congress will probably leave that alone, let that die a natural death, but you know whatever administration or party is in control of Congress at that point in time, will deal with that. It's my humble opinion.
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